Searching for and purchasing a new home can be both exciting, and nerve-racking. If this is your first time buying a home, those feelings can be even more heightened. You’ll want to make sure you have everything that you need so that you can be prepared for any situation that may arise. This is why you should know that the home you’ve chosen’s list price is not the total you’ll be spending. There are a few hidden costs that you’ll want to be aware of when signing the paperwork. Knowing about those expenses ahead of time will make it easier to be excited when closing day comes. Here are some important things to keep in mind:
Bigger Utility Bills
Every home is different. Utility costs vary based on the size of the home, where it is located, and the types of utilities it requires. According to move.org, the average home spends about $111 on electricity per month. Compare that to a two-bedroom apartment at $30 to $50 per month and this can add up. It stands to reason that the larger the living space, the higher your energy bills will be. This is something that can be easily overlooked when you’re in the midst of purchasing a new home. Don’t let that stop you from being excited, though. Simply take this into consideration when it comes to your overall budget.
Closing Costs
Most of us have heard about closing costs, but what are they really? These fees can consist of quite a few different things and vary from home-to-home. For the most part though, the term “closing costs” refer to lenders fees, a down payment on home insurance, miscellaneous taxes, and title insurance. These are the main culprits of closing costs but depending on your own unique situation, they may be more or less. In general, you can expect to pay between 2% and 5% of the home’s value in closing costs.
Maintenance and Repairs
Easily one of the biggest perks of living at a rental property, is that whenever something breaks or malfunctions, you simply have to call your landlord. They’ll also take care of landscaping such as snow removal and lawn cleanup. When you are purchasing a new home, it is always a good idea to have a home inspection. This way, you’ll know what you’re getting yourself into. You may also want to keep a savings’ fund specifically for maintenance and repairs, which are inevitable when you own your own home.
Property Tax
Though it varies from state to state, the average American will pay over $2,000 per year in property taxes. In some states though, such as New York, you’ll be paying even more, which on average, is close to $7,000 per year. This cost is definitely something you’ll want to consider when looking to purchase your new home that is often overlooked when you are a first-time homebuyer. Property taxes are typically lumped into your per-month mortgage payment, making them a bit easier to pay. But, on top of other lumped-in fees, property taxes will increase your monthly payment and can potentially increase year-over-year. This is important to keep in mind when you are deciding what kind of money you’ll be spending on the list price.
Mortgage Loan Interest
Mortgage companies are not going to let you borrow money without taking their own safety precautions. In that, they will charge you interest to ensure that their risk in trusting you to pay your mortgage accurately and on time is lowered. This is another expense, which will be tied into your monthly payments. Average mortgage interests rates depend on your credit of course, but you can expect to pay anywhere from 3% to 8% on a 30-year fixed rate mortgage.
Purchasing a new home requires time and research. You’ll want to make sure you are making the proper choice in buying the home of your dreams. Though the choice is yours and yours alone, Bekins will be there to help with your moving stress when you finally put in that home offer.
